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Business operations summary
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TOPIC 1: MARKETING FUNCTIONTERM DEFINITION
The path through which goods and services travel from the vendor to
Channels
the consumer.
The process of introducing a new product or production method into
Commercialisation
commerce—making it available on the market
A process of transmitting and sharing ideas, opinions, facts, values
Communication
etc. from one person to another or one organisation to another.
Demand Consumers' willingness and ability to consume a given good.
To spread the product throughout the marketplace such that a large
Distribution
number of people can buy it.
E-marketing is a process of planning and executing the distribution,
e-Marketing promotion in a computerised, networked environment, such as the
Internet
Foreign markets are any markets outside of a company's own
Foreign Marketing
country.
Grade means "to evaluate or rank,". A food inspector who grades a
Grading
crop, determining whether it is "food-grade."
Part of a country's economy that is not recognized as normal income
Informal Sector
sources and therefore do not declare and pay taxes.
Intermediaries put buyers and sellers together without taking
Intermediaries ownership of the product, service or property. They act as go-
betweens.
A commercial enterprise undertaken jointly by two or more parties
Joint Ventures
which otherwise retain their distinct identities.
The activity or fact of increasing the market share of an existing
Market Penetration
product, or promoting a new product, through strategies.
Perish To lose its normal qualities; rot or decay (of rubber, food, etc.)
A course or principle of action adopted or proposed by an
Policy
organisation or individual.
Relating to the publicising of a product, organisation, or venture so as
Promotional
to increase sales or public awareness.
The giving out of information about a product, person, or company
Publicity
for advertising or promotional purposes.
It is the accepting of the possibility of loss in the marketing of a
Risk bearing
product.
The practice of maintaining some level of consistency in the product
Standardisation
or service that a company provides.
Something that can be touched or felt: tangible assets have a value
Tangible
that can be precisely measured.
A group of potential customers to whom a company wants to sell its
Target Market
products and services.
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,Define MARKETING
Marketing is the action or business of PROMOTING and SELLING products or services,
including MARKET RESEARCH and ADVERTISING.
Briefly explain the ROLE of MARKETING
Marketing plays an important role in establishing relationships between customers and
the organisations offering to the market.
The marketing function is also tasked with branding of the organisation, participation in
publicity activities, advertising and customer interaction through feedback collection.
Outline/Mention/Discuss/Explain the following MARKETING ACTIVITIES:
Locating the Important for the business to establish target market and locate the
consumer most appropriate customers.
To obtain this information, the business should carry out market
research.
Market research entails the gathering of data on the market and
customers analysing it and using the information to make informed
decisions.
Market research can be done in different ways.
Examples: observing the markets, questionnaires, internet and
interviewing people.
Standardisation Products sold under the same label for the same price; should be a
uniform size, shape and standard.
Related products should therefore be identical.
Mechanisation of the production process, has promoted the
standardisation of products.
Grading Products are normally graded according the quality of the products.
Each level of grading has specific criteria to measure the product.
Grading allows the customers to choose the level of quality that best
suits their need and budget.
Examples of products that are sold in different grades:
- Floor tiles, cheese, eggs, meat
DID YOU KNOW? Grading is done not only for Products, but for Services as well?
The quality of fruits and vegetables is determined by various factors. For processed
commodities the letter grade "A" is the highest quality level. Grades "B," "C," and “D”
contain increasing amounts of product with less desirable characteristics in appearance
and/or edibility.
The Tourism Grading Council of South Africa (TGCSA) evaluates accommodation
establishments and grades them 1 to 5 stars, according to the type of accommodation &
the level of comfort and quality offered. For example: Hotels, Lodges, B&Bs, Self-Catering,
Caravan Parks, Camping Sites and Backpackers.
3
,Storage Refers to the storage of a product from the time it is finished to the
time it is sold to the customer.
Some products can be stored longer than other products.
Some products need specialised storage conditions.
Dairy products require cold storage before they are sold to the
customer and have a limited storage time.
Mass production have created a need for more storage.
These goods need to be stored until there is a demand for them.
Transport Time Some goods have a limited shelf life.
They need to be transported as quickly as possible
(Consideration so that the customer gets it as fresh as possible.
when choosing Example: fruit and vegetables.
a method of Conditions Frozen goods will need containers that are
transportation.) temperature controlled to ensure that the products
remain frozen.
Price Certain modes of transport are more expensive
than others.
Transport cost add to the final costs of the product
and it will also influence the profitability of the
business.
Size Large and heavy items such as cars cannot be
transported by air as they are too big and too
heavy.
Availability Certain modes of transport are not available in all
areas.
Businesses must consider where they are located
and what transport is available directly to them.
Example: If there is no harbour nearby, the products
still need to be transported to the harbour by
another mode of transport before they can be
exported.
Weight A product may be small, but very heavy to
transport.
Some methods of transportation price according to
weight and other according to size.
Example: Air transportation is priced according to
weight.
Financing Financing is needed to bridge the gap from when the product is
completed to when the customer pays for it.
Financing can be done in the following ways:
1. Credit facility: Client pays after taking possession of the goods or
services.
2. Deposit: This is paid when the customer orders the products or services
3. Lease agreements: Customers pay monthly instalments for the use of
the product or service, but never owns it themselves.
4
, Risk bearing All businesses carry risk such as unplanned and unforeseen
circumstances, e.g. outbreak of a pandemic
This can impact on their productivity, production process, delivery,
quantity and profit.
Businesses may transfer possible risks to insurance businesses.
Buying and Refers to the actual exchange of goods and services.
Selling This can be done in different ways:
o Online services, i.e. the internet.
o Third party or agent.
o Personal selling, i.e. direct selling from producers to consumers.
o Mail orders.
o Telesales
o Classified section of the newspaper
SUB-TOPIC: PRODUCT POLICY
Outline/Mention/Explain/Discuss the product policy with specific reference to types of
products, product development, trademarks and packaging.
TYPES OF PRODUCTS:
Durable Non-Durable Consumer Industrial
Products Products Products Products
5
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